Europe's leading insurance companies are now so worried by global warming, they are likely to use their financial muscle to get governments and the world's oil companies to do more to cut greenhouse gas emissions.

A greenhouse gas conference organised by the reinsurer, Swiss Re, has been discussing a report backed by nearly 300 financial institutions, which argued that global warming now poses a "serious threat" to the world economy.

The insurers have been drawing on the findings of the UN's Intergovernmental Panel on Climate Change, which concluded we can no longer be in any doubt that humans do effect the weather.

The result, say the insurers, is that in the next decade, the annual cost of global warming will hit $150bn a year - that's five times the annual earnings of the entire population of Nigeria.

More variable weather?

Andrew Dlugolenski, who helped write the report, told World Business Review there are now so many assets, and so many people living in dangerous areas, like storm tracks or beside the coast, that the economic damage from climate change is going to be huge.

"Even fuel switching, from one fossil fuel to another, from coal to natural gas, will reduce emissions about 40% to 60% per unit of energy"

Michael Marvin, US business council for sustainable energy

"The real problem will be in the Third World, in places like Bangladesh, some places in India like Mumbai (Bombay), Indonesia. These places are all the most exposed, because of their very low coast lines," he said.

Mr Dlugolenski says that if the predictions from climate experts come true, then extreme variability in the weather will worsen, with more examples of events like the recent floods in Europe and the failure of the Indian monsoon.

Influence

Insurers make up a big part of the financial services industry, which is not without influence since it manages $26 trillion of assets of companies, including of course those involved in the fossil fuel industry.

So will it use its influence to change government policies and the policies of the big oil companies?

It may sound simple, but Europe's leading financial institutions know there are big barriers currently blocking any more radical action to cut greenhouse gas emissions.

The barriers are both political - with countries unwilling to give up secure supplies of energy in an uncertain international climate - and technical.

Switching fuels

Michael Marvin, president of the US business council for sustainable energy, admits that renewable energy sources will continue to make up a small proportion of energy demand for some time to come.

However, Mr Marvin argues that America could reduce its greenhouse gas emissions dramatically simply by reducing its dependence on burning coal, which is the dirtiest of fuel sources and yet generates 55% of America's electricity.

BP and Shell maintain active solar and wind divisions

"Even fuel switching, from one fossil fuel to another, from coal to natural gas, will reduce emissions about 40% to 60% per unit of energy, any time that we can make that transition," he said.

Mr Marvin is critical of the decision by the world's biggest energy provider, Exxon Mobil, in the early 1990s to pull out of solar power after spending $500m on research.

"The idea that a marketplace can grow 30% or 40% year after year after year, a company cannot make money in that or recognise the opportunities in that - maybe that says more about the company than the technology?" he said.

Boycott

Exxon's rivals BP and Shell maintain active solar and wind divisions and in so doing, have escaped much of the criticism of Exxon that has flooded in from environmental groups.

The lobby group, Greenpeace has launched a campaign to persuade consumers to boycott Exxon's fuel, which trades under the Esso name in Europe.

Greenpeace claims that lobbying from Exxon was behind President Bush's decision to pull America out of the Kyoto Treaty aimed at cutting greenhouse gas emissions.

Greenpeace also argues that Exxon has in the past downplayed the link between increased burning of fossil fuels and severe weather.

Action

Gordon Sawyer, head of Exxon's public affairs in Britain, told World Business Review there continued to be "well documented gaps in the climate science", but nonetheless Exxon took "the risk of climate change seriously".

Mr Sawyer said that inaction was "totally inappropriate" and pointed to Exxon's big investment in energy efficiency in its own operations as well as the money it has spent in cooperation with Toyota and General Motors on hydrogen-based fuel cell technology to reduce carbon emissions from cars.

The question ahead is whether Exxon's reaction to the fears about climate change - described by Mr Sawyer as "learn as you go" type of action - will be fast enough to appease the environmental critics and its investors.

Mr Sawyer is clearly against any powerful new subsidies for wind and solar power, arguing that the economic benefits wouldn't justify the costs.

"We believe in good, competitive markets that do not depend on subsidies," he said.

Mr Sawyer denies that the Greenpeace boycott is working and says his investors would "look through" attempts to attack Exxon's image, and recognise that Exxon Mobil was "a forward-looking, technology-based company" committed to meeting the growing energy requirements of the global economy in a responsible way."